Small Loans For Businesses The costs of launching, operating and expanding a business can be very high. Although it’s great if you can pay for all your business expenses using your own money, there will likely come a point when your lack of capital stifles growth. When that happens, getting a loan for a small […]
Small Loans For Businesses
The costs of launching, operating and expanding a business can be very high. Although it’s great if you can pay for all your business expenses using your own money, there will likely come a point when your lack of capital stifles growth. When that happens, getting a loan for a small business can help you take your business further than you would have without the loan.
There are all kinds of loan options out there, and choosing the right loan is an important part of your business’s success. This guide will help you figure out which loan is best for your needs.
Business Loans
Let’s start with the first type of loan people think of for funding a business – a business loan. These tend to be long-term loans with terms of multiple years and low interest rates, although that will depend in large part on your credit score.
A business loan is a great choice if you can get one, but therein lies the problem. Many lenders have strict minimum borrower requirement for this type of loan. For example, some banks require that your business has annual revenues in the six figures and an operating history of at least two or three years.
You may have more luck with online lenders. Another popular option is pursuing a microloan through the U.S. Small Business Administration (SBA). Don’t be fooled by the name “microloan.” These can be up to $50,000, and they tend to be a bit easier to get than your traditional business loan because the SBA is backing the lender that issues your loan.
Overall, business loans are one of the better options if you want something you can pay back over a long period of time. However, you’ll need to meet the minimum requirements to qualify for a loan, and that can sometimes be difficult if your business is just starting out.
Personal Loans
Just because it’s called a personal loan doesn’t mean you’re prohibited from using the money for business expenses. In fact, a personal loan can be a fantastic alternative if you’re unable to secure a business loan. You can still get a multi-year loan term at a long interest rate. The difference is that you’re using only your own financial history to get the loan.
With a business loan, the lender will check out both you and your business. Since part of the minimum requirements will involve your business’s operational history and annual revenues, your business’s financial situation could stop you from getting a business loan. If you have a high credit score and enough income, you may be better off going with a personal loan, where that’s all the lender will be checking.
The main drawbacks with using a personal loan for your business are that you can’t get as much money as you could with a business loan and it won’t build your business credit score. Still, these are small prices to pay.
Title Loans
If you’re in need of a quick financial boost that you pay back within a few weeks or months, a title loan is one of the most convenient options on the market. These are short-term loans that you take out with your car as collateral, giving the lender your car title until you’ve paid the loan back. Laws on these loans vary for each state, and it’s a good idea to check the title loan news in your state to stay up to date.
There are several benefits of title loans, most of which are related to their speed and convenience. Unlike many long-term loans where the application process can last for days or weeks, the title loan application process is usually done within an hour, and you can get the full loan amount that day. You won’t need to let the lender check your credit, as the title loan only depends on the value of your car, which the lender uses to determine your loan amount.
Title loan interest rates and terms are two areas that states set on their own, but you can expect short terms, with the typical term length being 30 days. You’ll pay more in interest if you need to extend the loan, which means title loans are best used to cover short-term expenses.
Getting Your Business Loan
These are three of the most popular loan options on the market, and any one of them can work well for your business. Before you start looking through loans and comparing terms, it’s a good idea to figure out exactly how you’re going to use the loan for your business and what sort of time frame you’ll need to pay it back.
If you need a large loan and plenty of time to pay it off, business loans and personal loans are smart choices. For something fast, a title loan will fit your needs well. Take your time when getting a loan for a small business, because choosing the right financing option is critical for the success of your business.
